Financial Services Commission of Ontario
Commission des services financiers de l’Ontario
Neutral Citation: 2007 ONFSCDRS 26
FSCO A06-001695
BETWEEN:
JOHN GRAHAM
Applicant
and
ING INSURANCE COMPANY OF CANADA
Insurer
PRE-HEARING DECISION
Before:
Lorne Slotnick
Heard:
January 29, 2007, at the offices of the Financial Services Commission of Ontario in Toronto.
Appearances:
Lawrence H. Calenti for Mr. Graham
Lorraine Takacs for ING Insurance Company of Canada
Issues:
The Applicant, John Graham, was injured in a motor vehicle accident on June 7, 2004. He applied for and received statutory accident benefits from ING Insurance Company of Canada ("ING"), payable under the Schedule.1 ING terminated income replacement and other benefits in 2005. The parties were unable to resolve their disputes through mediation, and Mr. Graham applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.
At the pre-hearing discussion of this case held on January 29, 2007, the hearing was scheduled for July 23, 2007, but Mr. Graham requested production within 60 days of the pre-hearing any and all surveillance conducted by ING from the date of termination of benefits until the date of application for mediation. ING refused to disclose whether it had, in fact, conducted any surveillance of Mr. Graham.
The issues are:
- Should ING be required to produce any surveillance of Mr. Graham, whether or not it intends to rely on it at the hearing?
Result:
- ING is not required to produce any surveillance unless it intends to rely on it at the hearing, in which case it must comply with Rule 40 of the Dispute Resolution Practice Code (Fourth Edition, Updated October 2003).
EVIDENCE AND ANALYSIS:
Mr. Graham relies on the recent decision in Morgan and Security National Insurance Co./ Monnex Insurance Mgmt. Inc., (FSCO A06-000409, December 22, 2006), in which the pre-hearing arbitrator ordered the insurer to produce surveillance information and reports within 30 days of the pre-hearing decision. The arbitrator further ordered this surveillance material produced on an ongoing basis within 30 days of its creation.
The relevant Rules are: Rule 32 (Exchange of Documents Before Pre-Hearing);
Rule 39 (Evidence); and Rule 40 (Surveillance Evidence)
Rule 32 provides:
32.1 At least 10 days before the pre-hearing discussion, each party must:
(a) exchange all documents identified in the Application for Arbitration and the Response by Insurer, or explain why a document has not been provided;
(b) establish reasonable time frames for the exchange of any remaining documents;
(c) file the key documents the pre-hearing arbitrator will require to understand the issues in dispute;
(d) file a list of outstanding document requests and identify any disputed items.
32.2 Subject to the time lines under Rule 39, the parties have an ongoing responsibility to ensure the prompt and complete exchange of documents that are reasonably necessary to determine the issues being arbitrated, including updates to the information previously exchanged and any additional documents obtained.
32.3 Subject to Rule 39, an arbitrator may at any time order the production of documents or the giving of information that he or she considers relevant to the determination of the issues in the arbitration, on such terms as he or she considers appropriate.
Rule 39 provides:
39.1 Subject to Rule 39.2, all documents, reports (including experts' reports) and assessments to be introduced at a hearing by either party must be served on the other party at least 30 days before the first day of the hearing.
39.2 In extraordinary circumstances, a party may seek an arbitrator's permission to serve a document, report or assessment on the other party for use at a hearing less than 30 days before the first day of hearing.
Rule 40 provides:
40.1 If a party intends to rely on any portion of surveillance or investigative evidence, including videotapes, photographs, reports, notes and summaries of surveillance observations or investigations, at least 30 days before the hearing, the party shall provide:
(a) the names and qualifications of the persons who secured the investigative or surveillance evidence, the dates, times and places where any surveillance or investigation was undertaken; and
(b) copies of all videotapes, photographs, investigative reports, notes and summaries taken or prepared in connection with the issues in dispute.
In the Morgan case, the arbitrator concluded that Rule 32.3 grants arbitrators an unfettered discretion to order production of surveillance, providing it is relevant and not privileged. The decision states (at page 6):
There is a specific exclusion of Rule 39, but not Rule 40, in Rule 32.3. The result is an arbitrator's discretion pursuant to Rule 32.2 is unfettered in respect of Rule 40.
I agree with Mr. Morgan that the DRPC [Dispute Resolution Practice Code] sets out the minimum standards for production and admissibility which, pursuant to Rule 1.1, are to be interpreted "broadly, to produce the most just, quickest and least expensive resolution of the dispute." As well, Rule 81 gives arbitrators broad powers to make such orders as he or she considers just subject to the provisions of either the Insurance Act or the Statutory Powers Procedure Act. Therefore, I find that I have the authority to order the early and continuing production of surveillance information produced by Security or its agents. Further, I find that Rule 40 is not determinative of when the insurer's obligation to disclose arises. The obligation arises, in the absence of agreement between the parties, when an arbitrator determines it to have arisen.
The Morgan decision refers to the appeal ruling in Puljic and Zurich Insurance Company, (FSCO P00-000ZZ, June 1, 2000). Puljic upheld a decision refusing a request to produce surveillance information. The applicant in that case had argued he was entitled to the material regardless of whether the insurer intended to use the surveillance at the hearing. The arbitrator in Morgan distinguishes Puljic on the basis that it was decided under the 3rd edition of the Dispute Resolution Practice Code, not the current 4th edition.
In Puljic, the Director’s Delegate states as follows:
There is considerable merit in Mr. Puljic’s position. Courts and tribunals have generally been moving toward early and full disclosure, minimizing the ability of a party to "bury" relevant information that might assist the other side. The Commission certainly encourages the early exchange of documents as an important part of the mediation process and to ensure a fair hearing. For example, see Practice Note 4, Exchange of Documents. However, the rules governing the exchange of documents are found in the Practice Code, including a specific rule for surveillance evidence. For reasons that follow, I conclude that the order in this case is consistent with the provisions of the Practice Code and, as a result, find no error of law. The rules in the Practice Code are made pursuant to the Director's authority in s.21 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, and the Statutory Powers Procedure Act, R.S.O. 1990, c.S.ZZ, as amended. It was not suggested, nor do I find, that any of the production rules exceed the Director's authority. The question, therefore, is how the rules apply to Mr. Puljic's production request.
... the problem with Mr. Puljic's position is that the Practice Code includes a specific rule dealing with surveillance evidence: [the decision then sets out the rule 37.1 under the 3rd edition of the Code, and continues:]
While it might be argued that this rule deals only with surveillance on which the insurer intends to rely, remaining silent on the disclosure obligations for other surveillance, I am not convinced that is a fair reading. In my opinion, the clear implication of Rule 37.1 is that the insurer's production obligation only arises when it decides "to rely on any portion of surveillance or investigative evidence". There may be reason to question the appropriateness of this rule in a first-party system, but in my view, that is what the rule provides.
I have reviewed the two versions of the Dispute Resolution Practice Code and have concluded that there has been no significant change in the wording that would render the Puljic decision inapplicable to the current situation. Both the 3rd and the 4th edition contain specific sections dealing with surveillance evidence. That specific section (Rule 40 in the current version) presupposes a decision by a party to rely on surveillance evidence, before that evidence must be produced to the other party. As a specific section, Rule 40 must take precedence over the general rule (32.3) allowing an arbitrator to order production of documents or information he or she considers relevant.
In the current case, ING has not acknowledged whether it has undertaken any surveillance. There is nothing in the rules that compels ING to do so. If ING has conducted surveillance and wishes to rely on it, it must comply with Rule 40 and produce all the evidence at least 30 days before the hearing. In some cases, arbitrators - including me - have ordered production of the surveillance evidence more than 30 days prior to the hearing if it is being relied upon. This is based on the view that the 30 days in the Rule is a minimum standard that can be lengthened if the circumstances warrant. However, an order that surveillance evidence be produced more than 30 days before the hearing is still predicated on the assumption that the party conducting the surveillance intends to rely on at least a portion of it. In effect, the arbitrator is ordering the party to make a decision earlier than 30 days before the hearing, which in some cases may benefit both parties, for example by facilitating settlement.
In the current situation, not only has the insurer not stated whether it intends to rely on surveillance evidence, it has not even stated whether it has conducted surveillance. In the circumstances, I have concluded that I am bound by Rule 40 and the Puljic appeal decision. The applicant has no current right to production of surveillance evidence, if there is any.
February 12, 2007
Lorne Slotnick
Arbitrator
Date
Financial Services Commission of Ontario
Commission des services financiers de l’Ontario
Neutral Citation: 2007 ONFSCDRS 26
FSCO A06-001695
BETWEEN:
JOHN GRAHAM
Applicant
and
ING INSURANCE COMPANY OF CANADA
Insurer
ARBITRATION ORDER
Under section 282 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:
- ING is not required to produce surveillance evidence, except in accordance with the provisions of Rule 40.
February 12, 2007
Lorne Slotnick
Arbitrator
Date
Footnotes
- The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.